From $20 million to 3 Billion: Michael Kors from 2004 to 2014. What was the strategy used that fueled the growth of the brand?
As a judge on the highly successful reality television show “Project Runway” he gained popularity. Due to the public’s interest in seeing the design process of the brand, Michael Kors found the perfect platform to raise brand awareness and this influenced the business success positively.” (Ferraro, F., Baldo, A., Tozer, A., & Arribas, V., 2014, p 3) Due to the pairing with Sportswear Holdings their new strategy was “to transition the brand from one with a cult following to one that would grace the closets of a global, multigenerational clientele” (Ferraro, F. et al. 2014, p 3) with Kors as the chief creative officer. Consequently, the brand opened a new branch with a more accessible luxury. This was further split into two categories: the MICHAEL Michael Kors collection would offer footwear, accessories and apparel generating 75% of the brand’s sales; the KORS Michael Kors collection instead is focussing on jeans and footwear only – but it did not play a significant part.
Even though the two main product lines (Michael Kors Collection and MICHAEL Michael Kors) are offering the same products such as accessories, footwear and apparel, they are placed in different market categories, have therefore different competitors and aim at different targets.
Further, Kors’ strategy foresaw the “control [of] its image by owning stores so that it could shape the in-store experience and give its customers the jet-set-experience.” (Ferraro, F. et al. 2014, p. 6). He achieved this through three channels: retail, wholesale and licensing which contributed 48,1%, 47,6% and 4,1%, respectively, to the overall revenues in 2014.
On top Michael Kors built brand awareness exploiting the social media channels (he had more followers than any other brand) and collaborating with well-known artists/ singers. Further, celebrities demonstrated their brand loyalty. In 2014 $65,7 million were invested in advertising, as Kors was aiming at a 360-degree communication of the jet-set experience, which further enhanced the awareness built up the brand image gained.
Licensing part of the products (watches, eyewear and fragrances) was a further strategic decision the brand took which guaranteed top quality and a risk-free environment to a certain extent.
With the purchase of Jimmy Choo, Michael Kors is now aspiring to elevate the brand’s name toward the high-end luxury consumer. We will see what the future brings!
Ferraro, F., Baldo, A., Tozer, A., & Arribas, V. (2014, December 18). It’s in the Bag. Or Is It? Michael Kors’ Quest to Stay at the Top [PDF]. Brighton, Boston, MA: Harvard Business School Publishing.
Photo: Michael Kors Bag © spera.de